Hungary plans to end the price cap on basic food items from 1 August on expectations inflation will slow.

The Hungarian government introduced the price-cap scheme in October 2021 to ease the pressure on consumers facing rising food costs. One of the new measures announced yesterday (22 June) by Gergely Gulyas, the head of the Prime Minister’s Office, was an increase in the so-called mandatory discount scheme from 1 August 2023.

Hungary’s government is aiming to bring inflation down to below 10%. Prices rose 21.5% in May on a month-on-month basis, according to the Central Office of Statistics, or KSH. That was down from 24% in April and 25.2% in January.

Gulyas said yesterday that “one-digit inflation” is a “realistic” possibility.

The price caps introduced in 2021 applied to basic food items, with prices frozen from 15 October that year. The list included: granulated sugar, wheat flour, sunflower oil, pork leg, and specifically chicken breasts, chicken rump back, chicken back, chicken wing tip and 2.8% fat milk.

Eggs and potatoes were added on 30 September 2022, with prices frozen from that day.

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Hungary’s conservative government plans new measures covering food to keep prices affordable. As well as the mandatory discounts scheme, which will be raised to 15% from 10%, an ‘online price watch system’ will be introduced.

The discount scheme will cover a basket of 20 grocery items, the Hungarian news website reported. It only applies to retailers with at least HUF1bn ($2.9m) in total annual revenue.

Included products encompass poultry, milk, sour cream, cheese, bread, pastries, pasta, rice and cereals, and vegetables. Food retailers must pick one product every month in each category and make them at least 15% cheaper than the lowest price of the previous 30 days.

It will be the retailer’s own responsibility to promote the discounts to consumers.

The online price watch scheme will make it mandatory for eligible retailers to list the daily sales price of every product in certain categories in an online system set up by the government. The aim is to allow consumers to monitor movements in prices.